Romania today has a system that has learned to make money from rising energy prices at the expense of the population, given that it is a country with cheap hydropower, stable nuclear power, domestic gas and expanding renewables, claims the president of the Smart Energy Association (AEI), Dumitru Chisăliță, in an analysis published on Tuesday.

“Romania not only has the most expensive electricity in terms of purchasing power, it has a system that has learned to make money from the rising cost of energy on the backs of the population. Romania is currently experiencing one of the most absurd economic paradoxes in Europe. A country with cheap hydropower, stable nuclear power, domestic gas and expanding renewables has come to have one of the most burdensome energy bills in terms of purchasing power. The official explanation is obsessively repeated: ‘energy crisis’, ‘war’, ‘European markets’, ‘volatility’. All of them are real. But they are also insufficient explanations and just propaganda to ‘fool’ the population”, the specialist believes, according to Agerpres.

In Chisăliță’s opinion, although other states have gone through the same crisis, they have not transformed energy into a permanent source of economic and social tension, and “Romania has done exactly that”.

“The problem is no longer strictly the cost of energy production. The problem is the cost of the energy system itself, a mechanism that adds risk, inefficiency, distortions and administrative costs to each link between producer and consumer. If Romania operated as a normal energy market – competitive, predictable and coherently regulated – the final bill would be 25-45% lower. Not a little lower, but radically lower. If we take as a benchmark a functional European energy system – with stable rules, efficient costs and real competition – the comparison becomes uncomfortable (…) almost every link in the Romanian energy system costs more than it should in a functional economy. Not because Romania has poor resources. But because it has built an expensive system”, the head of the AEI mentions.

The expert explained that, out of every 100 lei on the bill, between 25 and 45 lei represents the cost of dysfunction, and in the years of crisis, almost half of the bill became an additional systemic cost.

“This is the great truth that public discourse avoids: Romanians do not only pay for energy. They pay for the instability of the system. Romania produces relatively cheaply and sells relatively expensively. This is where the biggest economic contradiction appears. Romania has: low-cost hydropower; nuclear among the cheapest stable sources; domestic gas; renewables with almost zero marginal cost after depreciation. Theoretically, all of this should make Romania one of the most competitive energy markets in the region. In practice, however, the end consumer pays for regional volatility, the European marginal mechanism, the lack of stable contracts, low liquidity, regulatory risk, market concentration,” notes Dumitru Chisăliță.

According to him, Romania no longer has a genuine free market, nor a coherent regulated system, given that, after 2022, the Romanian energy market has entered an almost permanent cycle of caps, compensations, surcharges, special contributions, administrative interventions and successive legislative amendments.

“The real problem is not that the state intervened. The problem is that it intervened permanently, unpredictably and contradictoryly. Romania no longer has a genuine free market, nor a coherent regulated system. It has a hybrid that socializes costs and privatizes volatility. Of the 45% extra paid by the consumer, how much is incompetence and how much is rent? This is the question that almost no one wants to ask publicly (…) The inconvenient answer is that both components are important. But not in equal proportions. In other words, Romania does not only pay the cost of energy. It also pays the cost of an ecosystem that has learned to make money from instability”, emphasizes the cited source.

The AEI president also believes that the real problem with the high energy bill is that certain bottlenecks have become convenient, and “perhaps the most toxic area is that of chronic bottlenecks” – delayed projects, postponed investments, insufficient capacities, limited interconnections and excessive bureaucracy.

“Here is the real drama of the Romanian energy market, not only that the system is inefficient, but that certain forms of inefficiency have become profitable for the “smart guys”. And when a system starts to make money from its own bottlenecks, reform becomes not only difficult, but contrary to the interests of those who control the game”, warns the specialist.